Despite RBI's status quo on interest rates, BoB hikes MCLR, borrowers with EMIs under pressure

Bank of Baroda, the second-largest PSU lender in India, raised its marginal cost of funds-based lending rate, by five basis points on Tuesday, with effect from April 12. The key interest rate below which a bank cannot give out a loan is known as the MCLR.

This move by Bank of Baroda comes just days after the RBI announced a status quo on the repo rate, the main interest rate at which it loans money to commercial banks, as well as its policy position. However, the RBI, in no uncertain terms, has kept the door open for more rate hikes if necessary.

According to a regulatory filing, effective Wednesday, April 12, Bank of Baroda's one-year MCLR would be 8.6% versus 8.55% earlier.

In addition, the Bank of Baroda increased its overnight MCLR by five basis points while maintaining the same interest rates for other tenors, as reported by Zee Business.

List of Interest Rates

MCLR tenor Existing MCLR (%) MCLR with effect from April 12, 2023 (%)
Overnight 7.9 7.95
One month 8.2 8.2
Three months 8.3 8.3
Six months 8.4 8.4
One year 8.55 8.6